Rebalancing with an automated system can save an adviser time

That is one of the chief findings from a new study by Scivantage & CEB TowerGroup

No, it is not Earth-shattering but does represent just one more finding that buttresses automated rebalancing use among advisers.

The financial technology provider Scivantage, and CEB TowerGroup (Corporate Executive Board bought research and analysis firm TowerGroup in 2009) announced today some of the results and the availability of their joint report titled, “The Importance of Automating Rebalancing.”

Among the findings:

That automated rebalancing saves an adviser over 250 hours a year compared to what they would spend manually rebalancing client accounts — in other words manual rebalancing on average takes 350 hours of an advisers time versus 100 hours when done using an automated system on average. [NOTE: I have yet to get an answer regarding how many advisers were interviewed/surveyed to come up with this calculation]

Another thing pointed out is a trend the authors noted, namely that advisers are increasingly taking on the role of being a portfolio manager; that said they report that according to the Money Management Institute that AUM “in this channel” has increased to $403 billion in Q1 2011, from $360 billion in all of 2010 and $291 billion in 2009.

Anyway, I really point all this out because I have written about every new rebalancing system that has been introduced since I started at InvestmentNews five years ago.

While it can be expensive in terms of outlay for the adviser, it has always seemed that advisers who make the investment tend to recoup their investment in fairly short order. Mostly that is in the form of time savings, and savings that can be in turn put toward prospecting or by taking on more of his or her clients' assets.

“Investors are increasingly expecting their advisor to take on the role of a portfolio manager,” said Bill Wagner, Vice President, Wealth Management Solutions, Scivantage in a prepared statement announcing the report's findings.

“Providing automated rebalancing tools benefits the client services relationship and provides a retention tool as a differentiator for advisers,” it added.

“Automated rebalancing technology is changing the adviser landscape. Rebalancing ensures [an] investor's portfolio remain aligned with their original objectives and appetite for risk,” said CEB TowerGroup research director Darrin Courtney. “The advent of automation in this space will increase straight-through processing desktop integration and allow advisors to use real-time data feeds in their workflow.”

Head over to Scivantage's special page to download the report for free, you will have to provide some basic contact information (hey nothing is ever entirely free). The 10 page-report is product-agnostic and does talk a great deal about the underlying necessity for rebalancing.

djanowski@investmentnews.com or on Twitter @ddjanowski

What follows are links to all those products I have written about over the years (referenced above).

This in-depth study provides a blueprint for the industry, providing actionable information to advisers, along with the latest solutions to help them drive profitability, efficiency and growth for their firm.